States in connection with the performance of those defense services.

(2) 49 Within forty-eight hours of the existence of, or a change in status of significant hostilities or terrorist acts or a series of such acts, which may endanger American lives or property, involving a country in which United States personnel are performing defense services pursuant to this Act or the Foreign Assistance Act of 1961, the President shall submit to the Speaker of the House of Representatives and to the President pro tempore of the Senate a report, in writing, classified if necessary, setting forth—

(A) the identity of such country;

(B) a description of such hostilities or terrorist acts; and

(C) the number of members of the United States Armed Forces and the number of United States civilian personnel that may be endangered by such hostilities or terrorist acts.

(d) If the President determines it to be in the national interest pursuant to subsection (b) of this section, billings for sales made under letters of offer issued under this section after the enactment of this subsection may be dated and issued upon delivery of the defense article or rendering of the defense service and shall be due and payable upon receipt thereof by the purchasing country or international organization. Interest shall be charged on any net amount due and payable which is not paid within sixty days after the date of such billing. The rate of interest charged shall be a rate not less than a rate determined by the Secretary of the Treasury taking into consideration the current average market yield on outstanding short-term obligations of the United States as of the last day of the month preceding the billing and shall be computed from the date of billing. The President may extend such sixty-day period to one hundred and twenty days if he determines that emergency requirements of the purchaser for acquisition of such defense articles or defense services exceed the ready availability to the purchaser of funds sufficient to pay the United States in full for them within such sixty-day period and submits that determination to the Congress together with a special emergency request for the authorization and appropriation of additional funds to finance such purchases under this Act.

(e)(1) After September 30, 1976, letters of offer for the sale of defense articles or for the sale of defense services that are issued pursuant to this section or pursuant to section 22 of this Act shall include appropriate charges for

(A) administrative services, calculated on an average percentage basis to recover the full estimated costs (excluding a pro rata share of fixed base operations costs) 51 of administration of sales made under this Act to all purchasers of such articles and services as specified in section 43(b) and section 43(c) of this Act; 52

combat activities" by sec. 102(1) of the International Security and Development Cooperation Act of 1980 (Public Law 96-533; 94 Stat. 3132).

51 The wording in parentheses was added by sec. 109 of the International Security and Development Cooperation Act of 1985 (Public Law 99-83; 99 Stat. 197).

52 Sec. 9104(cX1) of the Department of Defense Appropriations Act, 1990 (Public Law 101-165; 103 Stat. 1152), inserted reference to secs. 43(b) and (c).

(B) 53 a proportionate amount of any nonrecurring costs of research, development, and production of major defense equipment (except for equipment wholly paid for either from funds transferred under section 503(a)(3) of the Foreign Assistance Act of 1961 or from funds made available on a nonrepayable basis under section 23 of this Act); 54 and

(C) 55 the recovery of ordinary inventory losses associated with the sale from stock of defense articles that are being stored at the expense of the purchaser of such articles.

(2) The President may reduce or waive the charge or charges which would otherwise be considered appropriate under paragraph (1)(B) 56 for particular sales that would, if made, significantly advance United States Government interests in North Atlantic Treaty Organization standardization, standardization with the Armed Forces of Japan, Australia, or New Zealand in furtherance of the mutual defense treaties between the United States and those countries, or foreign procurement in the United States under coproduction arrangements.57

(3) 58 (A) The President may waive the charges for administrative services that would otherwise be required by paragraph (1)(A) in connection with any sale to the Maintenance and Supply Agency of the North Atlantic Treaty Organization in support of

(i) a weapon system partnership agreement; or

(ii) a NATO/SHAPE project.

(B) The Secretary of Defense may reimburse the fund established to carry out section 43(b) of this Act in the amount of the charges waived under subparagraph (A) of this paragraph. Any such reimbursement may be made from any funds available to the Department of Defense.

(C) As used in this paragraph

(i) the term "weapon system partnership agreement" means an agreement between two or more member countries of the Maintenance and Supply Agency of the North Atlantic Treaty Organization that

(I) is entered into pursuant to the terms of the charter of that organization; and

(II) is for the common logistic support of a specific weapon system common to the participating countries; and (ii) the term "NATO/SHAPE project" means a common-funded project supported by allocated credits from North Atlantic

63 Section 9104(c)(3) of the Department of Defense Appropriations Act, 1990 (Public Law 101165; 103 Stat. 1152), deleted par. (1XB) which read “(B) any use of plant and production equipment in connection with such defense articles;" and redesignated (C) and (D) as (B) and (C), respectively.

54 Sec. 9104(cX2) of the Department of Defense Appropriations Act, 1990 (Public Law 101-165; 103 Stat. 1152), inserted parenthetical language here.

55 This subparagraph was added by sec. 16 of the International Security Assistance Act of 1978 (Public Law 95-384; 92 Stat. 740) as (D), and redesignated as (C) by the Department of Defense Appropriations Act, 1990 (Public Law 101-165; 103 Stat. 1152).

56 Sec. 9104(cX3) of the Department of Defense Appropriations Act, 1990 (Public Law 101-165; 103 Stat. 1152) made conforming amendment here to show redesignation of par. (B) and (C), above.

57 The words "standardization with the *** and those countries," were added by sec. 104 of the International Security and Development Cooperation Act of 1981 (Public Law 97-113; 95 Stat. 1521).

58 Sec. 1002 of the National Defense Authorization Act, Fiscal Year 1989 (Public Law 100456; 102 Stat. 2037) added sec. 21(e)3).

Treaty Organization bodies or by host nations with NATO Infrastructure funds.

(f) Any contracts entered into between the United States and a foreign country under the authority of this section or section 22 of this Act shall be prepared in a manner which will permit them to be made available for public inspection to the fullest extent possible consistent with the national security of the United States.

(g) 59 The President may enter into North Atlantic Treaty Organization standardization agreements in carrying out section 814 of the Act of October 7, 1975 (Public Law 94-106), and may enter into similar agreements with Japan, Australia, and New Zealand, and with other countries which are major non-NATO allies,60 for the cooperative furnishing of training on a bilateral or multilateral basis, if the financial principles of such agreements are based on reciprocity. Such agreements shall include reimbursement for all direct costs but may exclude reimbursement for indirect costs, administrative surcharges, and costs of billeting of trainees (except to the extent that members of the United States Armed Forces occupying comparable accommodations are charged for such accommodations by the United States). Each such agreement shall be transmitted promptly to the Speaker of the House of Representatives and the Committees on Appropriations, Armed Services, and Foreign Relations of the Senate. As used in this subsection, the term "major non-NATO allies" means those countries designated as major nonNATO allies for purposes of section 2350a(i)(3) of title 10, United States Code.61

(h) 62 (1) The President is authorized to provide (without charge) quality assurance, inspection, contract administration services, 63 and contract audit defense services under this section

59 Subsec. (g) was added by sec. 108(b) of the International Security and Development Cooperation Act of 1985 (Public Law 99-83; 99 Stat. 197).

Subsec. (g) was previously repealed by the Foreign Assistance Appropriations Act, 1985 (sec. 101 of the Continuing Appropriations Act, 1985; Public Law 98-473; 98 Stat. 1895). This amendment had been included as sec. 102(b) of S. 2346, as introduced on February 27, 1984. Public Law 98-473 enacted sec. 102 of S. 2346. Subsec. (g) previously read as follows:

"(g) The President may enter into North Atlantic Treaty Organization standardization agreements in carrying out section 814 of the Act of October 7, 1975 (Public Law 94-106), and may enter into similar agreements with Japan, Australia, and New Zealand, for the cooperative furnishing of training on a bilateral or multilateral basis, if the financial principles of such agreements are based on reciprocity. Such agreements shall include reimbursement for all direct costs but may exclude reimbursement for indirect costs, administrative surcharges, and costs of billeting of trainees (except to the extent that members of the United States Armed Forces occupying comparable accommodations are charged for such accommodations by the United States). Each such agreement shall be transmitted promptly to the Speaker of the House of Representatives and the Committees on Appropriations, Armed Services, and Foreign Relations of the Sen

ate.".

The words "and with other countries which are major non-NATO allies" were added by sec. 580 of the Foreign Operations, Export Financing, and Related Programs Appropriations Act, 1988 (Continuing Appropriations for 1988, Public Law 100-202; 101 Stat. 1329-181).

61 Sec. 705(dX1) of Public Law 102-25 (105 Stat. 120) struck out "section 1105 of the National Defense Authorization Act of Fiscal Year 1987" and inserted in lieu thereof "section 2350a(iX3) of title 10, United States Code"; sec. 1105 of the National Defense Authorization Act, 1987, was repealed in 1989. The last sentence here was added by sec. 580 of the Foreign Operations, Export Financing, and Related Programs Appropriations Act, 1988 (Continuing Appropriations for 1988, Public Law 100-202; 101 Stat. 1329-181).

62 Sec. 12 of the International Security Assistance Act of 1979 (Public Law 96-92; 93 Stat. 705) redesignated subsec. (h) as subsec. (i) and added this new subsec. (h).

Subsequently, sec. 111 (1), (2), and (3) of the International Security and Development Cooperation Act of 1985 (Public Law 99-83; 99 Stat. 197), inserted the designation (1) after subsec. (h), added par. (2) and redesignated what was previously pars. (1) and (2) as subpars. (A) and (B) of the newly designated (hX1).

63 The language "contract administration services" was added by sec. 110 of Public Law 9983 (99 Stat. 197).

(A) 62 in connection with the placement or administration of any contract or subcontract for defense articles, defense services, or design and construction services 64 entered into after the date of enactment of this subsection by, or under this Act on behalf of, a foreign government which is a member of the North Atlantic Treaty Organization, if such government provides such services in accordance with an agreement on a reciprocal basis, without charge, to the United States Government; or

(B) 62 in connection with the placement or administration of any contract or subcontract for defense articles, defense services, or design and construction services 64 pursuant to the North Atlantic Treaty Organization Infrastructure Program in accordance with an agreement under which the foreign governments participating in such program provide such services, without charge, in connection with similar contracts or subcontracts.

(2) 62 In carrying out the objectives of this section, the President is authorized to provide cataloging data and cataloging services, without charge, to the North Atlantic Treaty Organization or to any member government of that Organization if that Organization or member government provides such data and services in accordance with an agreement on a reciprocal basis, without charge, to the United States Government.

(i) 65 (1) Sales of defense articles and defense services which could have significant adverse effect on the combat readiness of the Armed Forces of the United States shall be kept to an absolute minimum. The President shall transmit to the Speaker of the House of Representatives and the Committees on Armed Services and Foreign Relations of the Senate on the same day a written statement giving a complete explanation with respect to any proposal to sell, under this section or under authority of chapter 2B,66 any defense articles or defense services if such sale could have a significant adverse effect on the combat readiness of the Armed Forces of the United States. Each such statement shall be unclassified except to the extent that public disclosure of any item of information contained therein would be clearly detrimental to the security of the United States. Any necessarily classified information shall be confined to a supplemental report. Each such statement shall include an explanation relating to only one such proposal to sell and shall set forth

(A) the country or international organization to which the sale is proposed to be made;

(B) the amount of the proposed sale;

(C) a description of the defense article or service proposed to be sold;

(D) a full description of the impact which the proposed sale will have on the Armed Forces of the United States; and

64 The reference to design and construction services was added by sec. 115(b) of the International Security and Development Cooperation Act of 1980 (Public Law 96-533; 94 Stat. 3134). 65 Subsec. (i), originally added as subsec. (h) by sec. 206 of the International Security Assistance and Arms Export Control Act of 1976 (Public Law 94-329; 90 Stat. 738), was redesignated as subsec. (i) by sec. 12 of Public Law 96-92.

66 The reference to the authority under chapter 2B was added by sec. 3 of Public Law 97392 (96 Stat. 1962).

(E) a justification for such proposed sale, including a certification that such sale is important to the security of the United States.

A certification described in subparagraph (E) shall take effect on the date on which such certification is transmitted and shall remain in effect for not to exceed one year.

(2) No delivery may be made under any sale which is required to be reported under paragraph (1) of this subsection unless the certification required to be transmitted by paragraph (E) of paragraph (1) is in effect.

(j)67 TANK AND INFANTRY VEHICLE UPGRADES. (1) Funds received from the sale of tanks under this section shall be available for the upgrading of tanks for fielding to the Army.

(2) Funds received from the sale of infantry fighting vehicles or armored personnel carriers under this section shall be available for the upgrading of infantry fighting vehicles or armored personnel carriers for fielding to the Army.

(3) Paragraphs (1) and (2) apply only to the extent provided in advance in appropriations Acts.

(4) This subsection applies with respect to funds received from sales occurring after September 30, 1989.

(k) 68 Before entering into the sale under this Act of defense articles that are excess to the stocks of the Department of Defense, the President shall first consider the effects of the sale of the articles on the national technology and industrial base, particularly the extent, if any, to which the sale reduces the opportunities of entities in the national technology and industrial base to sell new equipment to the country or countries to which the excess defense articles are sold.

Sec. 22.69 Procurement for Cash Sales. (a) Except as otherwise provided in this section, the President may, without require

67 Sec. 114 of the National Defense Authorization Act for Fiscal Year 1993 (Public Law 102484; 106 Stat. 2333) added subsec. (j).

68 Sec. 731(d) of the Foreign Relations Authorization Act, Fiscal Years 1994 and 1995 (Public Law 103-236; 108 Stat. 503) added subsec. (k). 60 22 U.S.C. 2762. Sec. 25(3) of the FA Act of 1973 amended sec. 22, which formerly read as follows:

"Sec. 22. Procurement for Cash Sales.-The President may, without requirement for charge to any appropriation or contract authorization otherwise provided, enter into contracts for the procurement of defense articles or defense services for sale for United States dollars to any friendly country or international organization if such country or international organization provides the United States Government with a dependable undertaking (1) to pay the full amount of such contract which will assure the United States Government against any loss on the contract, and (2) to make funds available in such amounts and at such times as may be required to meet the payments required by the contract, and any damages and costs that may accrue from the cancellation of such contract, in advance of the time such payments, damages, or costs are due: Provided, That the President may, when he determines it to be in the national interest accept a dependable undertaking to make full payment within one hundred and twenty days after delivery of the defense articles, or the rendering of the defense services, and appropriations available to the Department of Defense may be used to meet the payments required by the contracts and shall be reimbursed by the amounts subsequently received from the country or international organization: Provided further, That the President may, when he determines it to be in the national interest, enter into sales agreements with purchasing countries or international organizations which fix prices to be paid by the purchasing countries or international organizations for the defense articles or defense services ordered. Funds made available under section 31 for financing sales shall be used to reimburse the applicable appropriations in the amounts required by the contracts which exceed the price so fixed, except that such reimbursement shall not be required upon determination by the President that the continued production of the defense article being sold is advantageous to the Armed Forces of the United States. Payments by purchasing countries or international organizations which exceed the amounts required by such contracts shall be transferred to the general fund of the Treasury. To the maximum extent possible, prices fixed under any such sales agreement shall be sufficient to reimburse the United